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FILED

JUL 31 2014

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP Nos. CC-13-1421-KuBlPa

) CC-13-1466-KuBlPa

JOAN BORSTEN VIDOV and OLEG ) (consolidated appeals)

VIDOV, )

Debtors. ) Bk. No. 11-22121

______________________________)

) Adv. No. 12-01017

SOFIA MARSHAK, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

JOAN BORSTEN VIDOV; OLEG )

VIDOV, )

)

Appellees. )

______________________________)

Argued and Submitted on June 26, 2014

at Pasadena, California

Filed – July 31, 2014

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Maureen A. Tighe, Bankruptcy Judge, Presiding

 

Appearances: Marc Y. Lazo of Wilson Harvey Browndorf LLP argued

for appellant Sofia Marshak; Carlos Singer argued

for appellees Joan Borsten Vidov and Oleg Vidov.

 

Before: KURTZ, BLUMENSTIEL** and PAPPAS, Bankruptcy Judges.

*This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8013-1.

**The Honorable Hannah L. Blumenstiel, Bankruptcy Judge for

the Northern District of California, sitting by designation.
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INTRODUCTION

Appellant Sofia Marshak1 entered into a settlement agreement

with the debtors Joan Borsten-Vidov and Oleg Vidov. Pursuant to

the settlement agreement, the Vidovs paid $250,000 to Marshak and

her father. In exchange, Marshak conveyed to the Vidovs all 

of her ownership interests in the businesses and real property

jointly owned by the parties. Marshak also released both the

Vidovs and the businesses from any claims arising out of any

matter or thing that occurred before the entry into the

settlement agreement.

Apparently unhappy with the results of the settlement

agreement and with the Vidovs’ post-settlement conduct, Marshak

first sued the Vidovs in state court and later sued them in the

bankruptcy court, stating claims under 11 U.S.C. §§ 523(a)(2)(A)

and 523(a)(6).2 The bankruptcy court granted summary judgment in

favor of the Vidovs, and Marshak appealed.

Because most of the alleged misrepresentations, concealment

and other misconduct Marshak complains of concern claims that

Marshak as a matter of law released, we conclude that Marshak

would not be able to establish at trial all of the elements for

an exception to discharge under either § 523(a)(2)(A) or

1Sofia Marshak is sometimes referred to in the record as

Sonia Marshak. For ease of reference, we refer to her herein

simply as Marshak.

2Unless specified otherwise, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

all Rule references are to the Federal Rules of Bankruptcy

Procedure. All Civil Rule references are to the Federal Rules of

Civil Procedure, and all Evidence Rule references are to the

Federal Rules of Evidence.

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§ 523(a)(6). To the extent that the alleged misrepresentations,

concealment and other misconduct Marshak complains of do not

concern claims that Marshak released, the summary judgment record

establishes that Marshak did not offer any evidence from which a

rational trier of fact could find critical elements necessary to

support Marshak’s nondischargeability claims.

 Accordingly, we AFFIRM the bankruptcy court’s summary judgment

ruling.

FACTS

For a time, Marshak, the Vidovs and others jointly owned

several businesses and a parcel of residential real property on

which some of those businesses were operated. The main business

was a drug abuse rehabilitation clinic. The parties purchased

real property on Corral Canyon Road in Malibu, California to

serve as the site of their clinic and formed a California limited

liability company, known as Corral Canyon Holdings, LLC

(“Holdings”), to hold title to the real property. After they

purchased the real property, Marshak and the Vidovs jointly

executed a grant deed conveying the real property to Holdings. 

That grant deed was recorded on December 19, 2007, in the

Official Records of Los Angeles County, as Instrument Number

20072784253.

A brush fire caused significant damage to the real property,

but the parties had fire insurance coverage, so they made claims

against the insurance policy based on their fire-related losses.

Subsequently, a number of disagreements arose regarding the

management and finances of the businesses. In February 2009, the

parties entered into a settlement agreement, which the parties

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intended to resolve all of their differences regarding the

companies, their finances, their operations, their assets and

their liabilities. For the most part, the events leading up to

the parties’ disputes are not relevant to this appeal. On the

other hand, the settlement is pertinent to our resolution of this

appeal, so we examine it in detail.

With a few limited exceptions not relevant here, Marshak and

her father conveyed all of their interests in the businesses to

the Vidovs in exchange for cash payments in the aggregate amount

of $250,000. These conveyances included the assignment of their

membership interests in Holdings. In a written assignment

document, which is attached to the settlement agreement, Marshak

conveyed all of her interest in Holdings and all of her interest

in the “income, profits, distributions, rights, capital, and

assets” of Holdings. The principal asset of Holdings was the

real property. To the extent Marshak might have retained any

direct interest in the real property after her execution and the

recording of the 2007 grant deed, she conveyed that interest to

Holdings by quitclaim deed at the time of the settlement.

The settlement agreement also contained general release

provisions. Of particular importance, Marshak released the

Vidovs and their businesses “from any and all claims, demands,

actions, causes of action . . . damages, obligations and

liabilities of every kind and nature whatsoever, whether known or

unknown, suspected or unsuspected,” that Marshak “can, shall or

may have” against the Vidovs and their businesses “arising out of

. . . any matter . . . or thing whatsoever from the beginning of

time to the date of this agreement.” Settlement Agreement

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(Feb. 6, 2009) at ¶ 14.1.3

At the same time, the settlement excepted from the coverage

of the general release any obligations the Vidovs owed to Marshak

arising from the settlement itself, including but not limited to

the Vidov’s promise to indemnify Marshak for any “Damages” (as

defined in the agreement) Marshak may incur as a result of any

breach of any debts or obligations of any of the businesses,

including but not limited to those debts and obligations listed

in schedules 3.4 or 6.2. Among the scheduled debts and

obligations were a $1.95 million mortgage loan from Washington

Mutual Bank that helped finance the parties’ purchase of the real

property, and a $395,000 line of credit the parties also took out

against the property.

In spite of the settlement agreement attempting to resolve

all of their differences, it was not long before trouble arose

once again. In early 2011, Marshak and her father sued the

Vidovs and their businesses in the Los Angeles County Superior

Court (Case No. BC462013) alleging breach of the settlement

agreement and misappropriation of trade secrets. 

Shortly thereafter, the Vidovs commenced their chapter 11

bankruptcy case, and Marshak filed her nondischargeability

complaint against them in January 2012. The operative pleading,

Marshak’s second amended complaint, stated claims for relief

3The settlement agreement also contained a provision in

which Marshak explicitly agreed that her release covered unknown

claims, as well as a standard form waiver of Marshak’s rights

under Cal. Civil Code § 1542. The unknown claims provision also

contained an acknowledgment by Marshak that she had not relied on

any representations, warranties or promises not expressly set

forth in the settlement agreement.

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based on §§ 523(a)(2)(A) and (a)(6). As alleged in the

complaint, Marshak accused the Vidovs of lying to her about the

fire insurance proceeds, of concealing when and how much in

proceeds they received from the insurer, and of misappropriating

the insurance proceeds. Marshak further accused the Vidovs of

misappropriating the loan proceeds from the $395,000 line of

credit and of deliberately ruining her credit rating by not

paying the $1.95 million mortgage.

The Vidovs filed a summary judgment motion. In relevant

part, the Vidovs asserted that all of the alleged

misrepresentations, omissions and other conduct were not

actionable under either § 523(a)(2)(A) or § 523(a)(6) as a result

of the the terms of the settlement agreement.

In her opposition to the summary judgment motion, Marshak in

essence explained that, based on her personal understanding of

and personal intent regarding the settlement agreement, she

expected that her exception to discharge claims survived both the

releases and the rights and interests she conveyed to the Vidovs.

In addition, Marshak interposed literally hundreds of evidentiary

objections to the declarations and documents the Vidovs had

offered in support of their summary judgment motion.

Without holding a hearing, the bankruptcy court granted the

Vidovs’ summary judgment motion by order entered August 14, 2013. 

The bankruptcy court cited multiple fatal defects in Marshak’s

exception to discharge claims. Among other things, the

bankruptcy court generally agreed with the Vidovs’ argument that

most of the claims could not be reconciled with the terms of the

settlement agreement.

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As for Marshak’s evidentiary objections, the bankruptcy

court held that both parties had adequately authenticated the

settlement agreement. And as for the remainder of the

objections, the bankruptcy court summarily overruled all of them

as either relating to non-essential matters or because they

really constituted legal argument going to the merits of the

dispute, which the court stated it had dealt with elsewhere to

the extent necessary to resolve the dispute.

Marshak filed two notices of appeal from the bankruptcy

court’s summary judgment ruling, and this Panel consolidated

those two appeals by order entered October 7, 2013.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(I), and we have jurisdiction under

28 U.S.C. § 158.

ISSUE

Did the bankruptcy court err when it granted summary

judgment in favor of the Vidovs?

STANDARDS OF REVIEW

We review de novo the bankruptcy court's decision to grant

summary judgment. Boyajian v. New Falls Corp. (In re Boyajian),

564 F.3d 1088, 1090 (9th Cir. 2009). We may affirm on any ground

supported by the record. Cal. Franchise Tax Bd. v. Kendall

(In re Jones), 657 F.3d 921, 924 (9th Cir. 2011). In addition,

we must ignore harmless error. Van Zandt v. Mbunda

(In re Mbunda), 484 B.R. 344, 355 (9th Cir. BAP 2012).

DISCUSSION

Much of this appeal hinges on Marshak’s assertions regarding

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the fire insurance proceeds. In essence, Marshak asserts that

the Vidovs misappropriated the insurance proceeds, that they lied

to her about the amount and their use of the insurance proceeds,

and that they concealed the true facts regarding the insurance

proceeds.

All of these assertions are based upon a false premise –

that Marshak retained a personal right to receive from the Vidovs

a portion of the insurance proceeds. Marshak claims that her

personal right to receive a portion of the insurance proceeds

arose from three things: (1) the fact that she was named as one

of the insureds on the fire insurance policy; (2) the fire itself

and the losses incurred; and (3) the fact that the Vidovs were

obligated to send her a portion of the insurance proceeds upon

receipt. According to Marshak, the Vidovs’ obligation to send

her a portion of the insurance proceeds upon receipt is evidenced

by certain 2007 and 2008 emails between her and Ms. Vidov. In

these emails, Marshak expressed her expectation that the Vidovs

would send her a portion of the insurance proceeds as soon as the

Vidovs received the insurance proceeds from the insurance

company.

For purposes of this appeal, we will assume the truth of the

facts that Marshak relies upon in support of her insurance

proceeds claim. Even if these facts are true, however, Marshak

released her insurance proceeds claim as a result of the release

she gave the Vidovs in the settlement agreement.

In construing the settlement agreement, we apply California

law because the settlement agreement contained a choice of law

provision specifying that the agreement would be governed by and

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construed and enforced in accordance with California law. See

Veal v. Am. Home Mortg. Serv., Inc. (In re Veal), 450 B.R. 897,

906, 918 (9th Cir. BAP 2011) (applying Illinois law because the

subject agreement involved in the dispute – a mortgage –

contained a choice of law provision making Illinois law

applicable).

Under California law, the fundamental purpose of contract

interpretation is to give effect to the mutual, objective intent

of the parties as manifested in the parties’ contract. Bank of

the West v. Super. Court, 2 Cal. 4th 1254, 1264 (1992); Founding

Members of the Newport Beach Country Club v. Newport Beach

Country Club, Inc., 109 Cal. App. 4th 944, 954, 956 (2003). 

Interpretation of the contract is a question of law when that

interpretation is based on the clear and explicit language of the

contract itself, or when uncontroverted extrinsic evidence is

considered as an aid in interpreting the contract. See United

States v. 1.377 Acres of Land, 352 F.3d 1259, 1264 (9th Cir.

2003) (citing California law); see also Newport Beach Country

Club, Inc., 109 Cal. App. 4th at 955 (“When no extrinsic evidence

is introduced, or when the competent extrinsic evidence is not in

conflict, the appellate court independently construes the

contract.”).

The release in the settlement agreement is a general release

and is broadly worded. On its face, the release covers all

claims and debts, of any nature whatsoever, that Marshak “can,

shall, or may have” against the Vidovs or their companies “by

reason of, arising out of, or which may hereafter be claimed to

arise out of . . . any matter, cause, or thing whatsoever from

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the beginning of time to the date of the [settlement agreement].” 

The facts on which Marshak relies in support of her insurance

proceeds claim all pre-date the settlement agreement (the

insurance coverage, the fire losses, and her understanding

regarding the Vidovs’ obligations concerning the proceeds). 

Indeed, in her opposition papers and on appeal, Marshak has

admitted that her expectation regarding the insurance proceeds

already existed at the time she entered into the settlement

agreement. Consequently, Marshak released her insurance proceeds

claim as part of the settlement.4

We acknowledge that the Vidovs received some of the

insurance proceeds before the settlement agreement was entered

into and received some of them afterwards. This fact does not

change our analysis. That Marshak’s insurance proceeds claim had

not fully and completely matured at the time of the settlement

does not change the fact that all of the circumstances on which

the claim itself was based (the insurance coverage, the fire

losses, and Marshak’s understanding regarding the Vidovs’

obligations concerning the proceeds) all existed before the

4To the extent Marshak contends that, by entering into the

settlement, she did not personally intend to release her claim to

a portion of the insurance proceeds, this intention does not

improve Marshak’s case. Marshak never offered any evidence

indicating that she ever expressed this intent as part of the

settlement documentation or during the settlement negotiations. 

As a result, her undisclosed private intent regarding not

releasing her claim to a portion of the insurance proceeds cannot

be considered in construing the contract. See Newport Beach

Country Club, Inc., 109 Cal. App. 4th at 956, 960 (holding that

extrinsic evidence regarding a party’s private undisclosed intent

was immaterial in construing a contract under California contract

law, which adheres to the objective theory of contracts).

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parties executed the settlement.

Even if we had any doubt (which we do not) regarding the

scope of the release and whether the parties expressed an

objective intent for the release to cover Marshak’s insurance

proceeds claim, the Vidovs presented extrinsic evidence

demonstrating: (1) that Marshak was aware of the insurance

proceeds claim at the time she negotiated the settlement; and

(2) that Marshak manifested an intent for the settlement to cover

the insurance proceeds claim. This extrinsic evidence consisted

of paragraph 4 of the declaration of Robert L. Lawrence and

exhibit C attached thereto. Exhibit C was an emailed copy of a

letter dated January 25, 2009, from Marshak’s counsel to the

Vidovs’ counsel (Lawrence) regarding the then-pending settlement

between Marshak and the Vidovs. In relevant part, on page 4 of

exhibit C, Marshak’s counsel advised the Vidovs’ counsel of a

dispute regarding the amount of insurance proceeds already

received by the Vidovs and further expressed concern regarding

the Vidovs’ potential future receipt of additional insurance

proceeds. This discussion of the insurance proceeds was set

forth in a section of the January 25, 2009 letter explicitly

dedicated to “the consequences of [the Vidovs’] failing to accept

[Marshak’s settlement] offer.”

The only rational interpretation of this extrinsic evidence

is that Marshak anticipated releasing any claim with respect to

the insurance proceeds as part of the settlement agreement. 

Moreover, this extrinsic evidence is consistent with the plain,

broad language of the general release.

This extrinsic evidence was uncontroverted, and was relevant

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and admissible for the purpose of interpreting the settlement

agreement. See Newport Beach Country Club, Inc., 109 Cal. App.

4th at 953-58 (holding that extrinsic evidence could be used to

help determine the meaning of an integrated contract, provided

that the extrinsic evidence "is relevant to prove a meaning to

which the language of the instrument is reasonably

susceptible."); see also Headlands Reserve, LLC v. Ctr. for

Natural Lands Mgmt., 523 F.Supp. 2d 1113, 1117, 1119, 1127 & n.6

(C.D. Cal. 2007) (holding that extrinsic evidence offered to

prove a meaning to which a fully integrated contract was

reasonably susceptible could be considered in interpreting a

contract under California law).

Marshak contends on appeal that the bankruptcy court should

have excluded the copy of the settlement agreement attached as an

exhibit to the Vidovs’ summary judgment papers. According to

Marshak, the attached copy of the settlement agreement was

unauthenticated and violated the best evidence rule. See

Evidence Rules 901 and 1002. These arguments are spurious. In

both her opposition papers and on appeal, Marshak relied on

precisely the same copy of the settlement agreement to which she

raised authenticity and best evidence objections. Hence, these

evidentiary objections do not reflect a genuine concern as to

whether the copy of the agreement offered into evidence was

authentic and accurate; rather, they reflect an attempt to

prevail on summary judgment on an evidentiary technicality. “A

duplicate is admissible to the same extent as the original unless

a genuine question is raised about the original's authenticity or

the circumstances make it unfair to admit the duplicate.” 

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Evidence Rule 1003 (emphasis added). Accord, United States v.

Smith, 893 F.2d 1573, 1579 (9th Cir. 1990).

Put another way, Marshak conceded away her authenticity and

best evidence objections by citing to and relying upon the same

copy of the settlement agreement to support her appeal and her

summary judgment opposition. See generally Alexander Dawson,

Inc. v. NLRB, 586 F.2d 1300, 1302-03 (9th Cir. 1978) (holding

that appellant effectively conceded that certain exhibits were

authentic); Tallant v. Kaufman (In re Tallant), 218 B.R. 58,

69-70 (9th Cir. BAP 1998) (appellant’s admissions regarding

contents of writing satisfied any concerns arising from the best

evidence rule).5

Marshak also contends that the February 6, 2009 settlement

agreement, and the January 25, 2009 email letter to Robert

Lawrence, were confidential settlement communications and that

the bankruptcy court should have excluded them based on Evidence

Rule 408. Generally speaking, Evidence Rule 408 excludes

evidence related to settlements and compromises to the extent the

proponent seeks to offer the evidence to prove or disprove the

validity or the amount of the claim underlying the settlement or

compromise. 

Marshak’s reliance on Evidence Rule 408 is misplaced. It is

well established that this rule does not exclude evidence related

5In her opposition papers, Marshak promised to provide to

the bankruptcy court, under seal, the original settlement

agreement. But there is nothing in the record indicating that

Marshak followed through and actually provided the original

settlement agreement or any other documents, under seal or

otherwise.

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to a settlement when it is offered for the purposes of

interpreting or enforcing the settlement. See Advisory Committee

Notes accompanying 2006 amendments to Evidence Rule 408 (citing

Coakley & Williams v. Structural Concrete Equip., 973 F.2d 349,

353-54 (4th Cir. 1992)); see also Cates v. Morgan Portable Bldg.

Corp., 780 F.2d 683, 691 (7th Cir. 1985) (“Obviously a settlement

agreement is admissible to prove the parties' undertakings in the

agreement, should it be argued that a party broke the

agreement.”).

Marshak raised one additional evidentiary objection to both

the February 6, 2009 settlement agreement and the January 25,

2009 email letter to Robert Lawrence. Marshak contended that

these documents were inadmissible because they contain hearsay

statements that the Vidovs offered to prove the truth of the

matter asserted. Marshak’s hearsay objections cited Evidence

Rule 802, but they did not give any guidance as to which

particular statements in the documents were implicated by this

rule. This lack of specificity would have made it difficult if

not impossible for the bankruptcy court to meaningfully rule upon

these objections, except in some sort of general and summary

fashion. Nor did Marshak provide us with any greater specificity

when she pressed these evidentiary objections on appeal. By

itself, this absence of specificity would permit us to conclude

that she has forfeited these objections on appeal. Christian

Legal Soc'y v. Wu, 626 F.3d 483, 487–88 (9th Cir. 2010) (“We

review only issues [that] are argued specifically and distinctly

in a party's opening brief.”); Brownfield v. City of Yakima,

612 F.3d 1140, 1149 n.4 (9th Cir. 2010) (same).

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Even if we were to attempt some sort of review of Marshak’s

hearsay objections, they appear meritless on their face. Many of

the statements in both documents would qualify as opposing party

admissions, which are explicitly excluded from the definition of

hearsay. See Evidence Rule 801(d)(2). To the extent they do not

qualify as party admissions, the statements contained in the

settlement and in the settlement negotiation letter generally

were not offered to prove the truth of any particular out-ofcourt statement; rather, the documents were offered to prove the

terms and scope of the parties’ settlement, which by Marshak’s

own admission were set forth therein. Consequently, these

settlement documents can speak for themselves, and any question

regarding their accuracy or authenticity was not a matter of

concern under the rule against hearsay. See generally United

States v. Earle, 488 F.3d 537, 545 (1st Cir. 2007) (stating that

an authenticated document can speak for itself when it is

available to be examined in the court proceedings). Furthermore,

as we already have concluded above, Marshak’s objections

regarding accuracy and authenticity were not genuine.

Accordingly, we reject all of the evidentiary objections

that Marshak raised in response to the February 6, 2009

settlement agreement and the January 25, 2009 email letter to

Robert Lawrence. Moreover, because Marshak’s other evidentiary

objections would not and could not alter our analysis and

resolution of this appeal, any error of the bankruptcy court with

regard to these other evidentiary objections was harmless. See

In re Mbunda, 484 B.R. at 355.

Marshak further complains that the bankruptcy court applied

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the incorrect legal standard in granting summary judgment against

her. Having reviewed the entirety of bankruptcy court’s ruling,

we have not found any reversible error with respect to the

summary judgment standards the bankruptcy court applied. 

Nonetheless, because we review summary judgment rulings de novo,

we will recite the general law applicable to summary judgment

proceedings, and we will then conduct our own application of that

law to the circumstances of this case.

Summary judgment is appropriate when there are no genuine

issues of material fact, and, when viewing the evidence most

favorably to the non-moving party, the movant is entitled to

prevail as a matter of law. Civil Rule 56 (made applicable in

adversary proceedings by Rule 7056); Celotex Corp. v. Catrett,

477 U.S. 317, 322-23 (1986). Material facts that would preclude

summary judgment are those which, under applicable substantive

law, may affect the outcome of the case. The substantive law

determines which facts are material. Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986). All facts genuinely in dispute

must be viewed "in the light most favorable to the non-moving

party." Scott v. Harris, 550 U.S. 372, 380 (2007). And all

reasonable inferences that can be drawn in the non-moving party's

favor must be so drawn. Id. at 378.

Civil Rule 56 “mandates” that a trial court enter summary

judgment when, after adequate opportunity for discovery, the

adverse party fails to present evidence in response to a summary

judgment motion sufficient to establish the existence of an

essential element of that party's case, on which that party would

bear the burden of proof at trial. Celotex, 477 U.S. at 323. As

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the Supreme Court in Celotex explained, “In such a situation,

there can be ‘no genuine issue as to any material fact,’ since a

complete failure of proof concerning an essential element of the

nonmoving party's case necessarily renders all other facts

immaterial.” Id. at 322-23.

Marshak strenuously argues that, on summary judgment, the

burden is on the movant to demonstrate that it is entitled to

summary judgment. This much is true. But Marshak ignores the

fact that the Vidovs could satisfy their summary judgment burden

simply by identifying those portions of the record which

demonstrated the absence of a genuine issue of material fact as

to one or more elements on which Marshak would bear the burden of

proof at trial. Id. For summary judgment purposes, “[a]n issue

is ‘genuine’ only if there is sufficient evidence for a

reasonable fact finder to find for the non-moving party.” Far

Out Productions, Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001)

(emphasis added).

The Vidovs met their summary judgment burden here by

pointing to the February 6, 2009 settlement agreement and the

January 25, 2009 email letter to Robert Lawrence and explaining

how these documents negated essential elements of Marshak’s

claims. See Celotex, 477 U.S. at 323. 

In sum, even though Marshak was the non-moving party in the

summary judgment proceedings, because she would bear the ultimate

burden of proof at trial to establish all of the elements

necessary to support her nondischargeability claims, she needed

to make a showing sufficient to establish genuine issues of fact

with respect to those elements in order to survive the Vidovs’

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summary judgment motion. Id.

In order to prevail at trial on her § 523(a)(2)(A) exception

to discharge claim, Marshak needed to prove by a preponderance of

the evidence the following five elements: (1) that the debtor

made material misrepresentations; (2) that the debtor knew the

misrepresentations were false at the time they were made;

(3) that the debtor made the misrepresentations with the

intention and purpose of deceiving the creditor; (4) that the

creditor justifiably relied on such misrepresentations; and

(5) that the creditor sustained a loss or injury as a proximate

result of the misrepresentations having been made. Ghomeshi v.

Sabban (In re Sabban), 600 F.3d 1219, 1222 (9th Cir. 2010); see

also Field v. Mans, 516 U.S. 59, 67-68 (1995) (explaining that

§ 523(a)(2)(A) requires, among other things, intent, reliance and

materiality); Citibank (South Dakota) N.A. v. Lee (In re Lee),

186 B.R. 695, 697-98 (9th Cir. BAP 1995).

Here, in light of our construction of Marshak’s release as

covering any entitlement of hers with respect to the insurance

proceeds, and in light of the uncontroverted fact that Marshak

transferred to the Vidovs all of her ownership interests with

respect to the real property and Holdings, the Vidovs had no

further obligation to Marshak on account of the insurance

proceeds once the parties entered into the settlement agreement. 

As a result, none of the alleged misrepresentations, concealment

or other misconduct concerning the insurance proceeds that

Marshak emphasizes in her opening appeal brief could have

constituted a material misrepresentation or a material

concealment for purposes of § 523(a)(2)(A). See In re Tallant,

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218 B.R. at 68 n.14 (indicating that a concealment of facts is

material for purposes of § 523(a)(2)(A) only if the concealment

pertained to some right or interest of the creditor). In the

same vein, the conduct complained of could not have proximately

caused Marshak to suffer any loss, injury or damages within the

meaning of § 523(a)(2)(A).

To the extent Marshak asserts that the Vidovs’ alleged

misappropriation of the insurance proceeds constituted a debt

arising from a willful and malicious injury, that assertion 

similarly is meritless. Even if we were to assume for summary

judgment purposes all of the other elements for an exception to

discharge under § 523(a)(6), the summary judgment record

demonstrated that Marshak would not be able to prove that the

Vidovs’ alleged wrongful acts concerning the insurance proceeds

caused her any injury. In light of the settlement and the broad

terms of Marshak’s release, Marshak could not possibly

demonstrate any injury from these acts because she relinquished

any interest in or entitlement to the insurance proceeds. Unless

the willful and malicious conduct leads to injury or damages,

there can be no exception to discharge under § 523(a)(6). See

Ormsby v. First Am. Title Co. of Nev. (In re Ormsby), 591 F.3d

1199, 1206 (9th Cir. 2010) (“A malicious injury involves (1) a

wrongful act, (2) done intentionally, (3) which necessarily

causes injury, and (4) is done without just cause or excuse.”

(Emphasis added)).

Marshak briefly mentions in her opening appeal brief a few

other instances of alleged misconduct, unconnected to her

insurance proceeds claim. She argues that these other instances

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of alleged misconduct independently justify an exception to

discharge. Each of these arguments lacks merit. In one

instance, Marshak contends that, after the settlement agreement

was entered into, the Vidovs lied to her about attempting to

negotiate a refinancing of the $1.95 million mortgage, for which

Marshak was still liable to the bank. Marshak further contends

that this so-called refinancing actually was a loan modification

that potentially could have increased her continuing liability on

the mortgage. However, in the same paragraph, Marshak admits

that she did not believe the Vidovs and that she successfully

prevented the loan modification from occurring. Under these

facts as admitted by Marshak, there was no reliance and no

damages, so there could not have been a viable § 523(a)(2)(A)

claim arising therefrom.

In another instance, Marshak contends that the Vidovs

falsely promised in the settlement agreement, without any intent

to actually perform, that they were going to timely pay the $1.95

million mortgage, so as to prevent any harm to Marshak’s credit

rating. The only evidence Marshak cites in support of this

contention is her own declaration, which states in relevant part:

In January of 2011, I also learned that the Vidovs

deliberately destroyed my credit, by failing to pay the

mortgage on the Coral Canyon property, as they agreed

under the Settlement Agreement.

Marshak Decl. (April 25, 2013) at ¶ 19.

During our review of the settlement agreement and the

attached settlement documentation, we found no indication that

the Vidovs ever made a promise that they would timely pay the

mortgage so as to prevent any harm to Marshak’s credit rating. 

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To the contrary, the settlement agreement provides for potential

defaults on the mortgage not by prohibition but instead by

indemnification.

As we already have explained, Marshak’s subjective

undisclosed intentions regarding what she hoped to get out of the

settlement are immaterial for purposes of construing what the

parties actually agreed to. See Newport Beach Country Club,

Inc., 109 Cal. App. 4th at 956, 960. There was no evidence in

the summary judgment record indicating that Marshak ever

disclosed her expectation that the Vidovs would not default on

the mortgage and would not thereby damage her credit rating. 

Consequently, there was no evidence of this promise for purposes

of Marshak’s § 523(a)(2)(A) claim.6

The final instance of alleged misconduct that Marshak

addresses in her appeal brief concerns the Vidovs’ alleged

misappropriation of the $395,000 line of credit. It is difficult

to tell from Marshak’s papers when she contends this alleged

misappropriation occurred. In any event, regardless of the

precise timing of this alleged misappropriation, this contention

also is meritless. To the extent Marshak claims that this

misappropriation occurred before she entered into the settlement

agreement, she released any claim in connection therewith. And

6As a separate and independent basis for rejecting this

particular contention, any alleged harm to Marshak’s credit

rating resulting from the Vidovs’ alleged false promise to keep

current on the $1.95 million mortgage likely is not actionable

under either § 523(a)(2)(A) or § 523(a)(6). See Cromer v. Cromer

(In re Cromer), 164 B.R. 680, 682-83 (Bankr. M.D. Fla. 1994)

(rejecting similar exception to discharge claims based on similar

conduct of the debtor).

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to the extent Marshak claims that this misappropriation occurred

after the settlement agreement was entered into, she ceased to

have any interest in or entitlement to say how the Vidovs and

their businesses should have used the line of credit. 

CONCLUSION

For the reasons set forth above, we AFFIRM the bankruptcy

court’s summary judgment in favor of the Vidovs.

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